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Great-West Life cutting 13% of workforce, about 1,500 jobs, including at London Life

London Life's parent company Great West Life Co. announced a 13% cut in their workforce. Photograph taken on Tuesday April 25, 2017 at the London Life building in London Ont. Mike Hensen/The London Free Press/Postmedia Network

London’s financial sector will absorb almost one-third of 1,500 jobs being cut nationwide by Great-West Lifeco, as the insurance giant’s cost-cutting hits its London Life operation.

Winnipeg-based Great-West is cutting 13 per cent of its total workforce to drive down costs, mainly through technology, and 430 jobs will be eliminated at London Life over the next two years.

One of the city’s largest and most iconic employers, London Life has about 3,300 staff in the city.

About 450 jobs are to be cut at Great-West’s Winnipeg headquarters.

The overall job cuts will be generally be distributed across the company, resulting in the 430 cuts in London, Great-West’s chief executive said. But Paul Mahon said the number of people laid off will be reduced by attrition, voluntary buyouts and the creation of new jobs, especially in the digital sector.

“Over the last couple of years we have been growing out digital services and a lot of that has been happening in London,” he said.

Great-West acquired London Life in 1997 in a $2.94-billion deal.

Mahon said he expects the cutback in jobs at London Life will be offset by future growth.

He said 1,800 people were employed at London Life at the time of the 1999 takeover, but the number has since risen to 3,300.

“We’ve had huge automation over that period, but we have also grown the company,” he said, adding “the steps we are taking will position us for more growth.”

Great-West has spent tens of millions of dollars to renovate the London Life headquarters in recent years, Mahon said.

He said the company has to respond to changes in technology, since customers prefer to connect online or through smartphones.

“Customer expectations are changing. They want access to websites and digital tools so they can self-serve. We have to invest in new services, but the customer will not pay more. They’re expecting those digital services at the same or lower cost,” he said.

The cutbacks at London Life were foreshadowed by Paul Desmarais III, who was in the city earlier this month speaking to a summit organized by the London Chamber of Commerce.

Desmarais is vice-president of the Power Corp. of Canada, a holding company that is Great-West Lifeco’s majority shareholder.

Desmarais told the summit that some of the biggest technological disruption has been in the banking and insurance sector, led by millennials who want digital services but have little brand loyalty.

“Now, all this has come to fruition right in our backyard just a few weeks later,” said Gerry Macartney, who heads the London Chamber of Commerce.

Macartney said he hopes the setback from the London Life job cuts will be temporary.

“It will have an impact on the local economy, but some of those jobs may come back. I think the company is committed to London,” he said.

Staff at London Life attended internal information meetings at the headquarters Tuesday.

London Life staff approached by The Free Press declined to comment, citing confidentially rules.

Great-West recently moved to online platforms for retirement planning and the submission of claims in group insurance plans.

In a news release, Great-West said job cuts would come from eliminating temporary jobs, voluntary buyouts and layoffs.

The job cuts are expected to be partly offset by business growth, in addition to attrition and hiring freezes.

Other cost cutting will come from moving operations out of rented space and new technology.

Great-West says the restructuring will save the company about $200 million a year, before taxes.

London Life Insurance Co.

1874: Company founded under direction of Joseph Jeffery, its first president.